In the days leading up to the European Central Bank’s rate decision on July 3rd, 2008, many political leaders around Europe publically pleaded for the ECB to leave interest rates unchanged. Among others, French President Sarkozy voiced the opinion that the recent rise in inflation was due primarily to the spike in commodity prices.¹ As [...]
Archive | August, 2008
Peak Oil in the U.K.
The price of oil has dictated the dollars recent resurgence, but it has not been favorable to the pound. The United Kingdom is a net oil exporter; through North Sea oil fields that produce around 1.7 million barrels a day. A drop in the price of oil would hurt profit margins at some of Britain’s [...]
The Cable
“It may still just be summer but there is a feeling of chill in the economic air. The British economy is going through a difficult and painful adjustment due to higher energy and commodity prices and in banking, credit and housing markets. This adjustment to our economy cannot be avoided and as a result, inflation [...]
Raising the White Flag
It is not easy for many to admit that they made an error. It seems the President Trichet might finally be starting to embark on that difficult path. After raising rates in the Euro-Zone over the protests of many top figures within that continent, Trichet finally admitted what the rest of the world had realized [...]
The Dollars Resurgence
The Dollars resurgence can be attributed to a variety of factors European stagnation, oils collapse, or better yet Michael Phelps.The most important factor is that the USD is considered the lesser of two evils in regards to economic health.Governor King came out and expressed that the down side risks of recession outweighed the future risks [...]
…More Calm Before the Storm
So a week ago, I wrote that the US Non-Farm Payrolls was the event “for all the marbles.” That was true, and we have seen the US Dollar continue its rally through this week largely on the back of that news. However, within the span of one hour tomorrow, there are two news events that [...]
Australian Blues
The AUD has had a remarkable run for the past seven years, the AUD has appreciated from .48 to near parity over the past seven years. The commodity boom has been very beneficial to the Australian economy. Exports of iron and raw materials have caused the Aussie economy to boom. The global slowdown will definitely [...]
Big Mac
The theory of Purchasing Price Parity is hard to digest because of the fact that is so abstract and it does not apply non-tradable goods.PPP is a theory that states all goods will cost the same across borders, because if one country charges more then consumers will change their spending patterns.There are a number of [...]
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